Head of board overseeing Puerto Rico finances to step down

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SAN JUAN, Puerto Rico (AP) — The executive director for a federal control board overseeing Puerto Rico’s finances announced Thursday that she is stepping down amid a historic debt restructuring after five years at the helm.

The announcement by Natalie Jaresko, who previously served as Ukraine’s finance minister, comes just weeks after a federal judge signed a plan overseen and approved by the board to help the U.S. territory exit from bankruptcy, marking the largest municipal debt restructuring in U.S. history.

“Puerto Rico has a historic opportunity,” she told The Associated Press by phone. “The foundation is in place. There is still work to be done. But this is a turning point.”

She said the board has been able to reduce most of Puerto Rico’s debt to affordable levels, stabilize the island’s finances and create a road map for a stronger economy. Still pending is the restructuring of some $9 billion in debt held by Puerto Rico’s Electric Power Authority and additional debt held by the Highways and Transportation Authority, as well as looming reforms in other government agencies. Jaresko said she also would like to see the implementation of a type of Congressional Budget Office for Puerto Rico’s legislature.

Jaresko is scheduled to step down on April 1. The board said it is seeking a new executive director, having previously noted that it will remain in place until Puerto Rico approves four consecutive balanced budgets.

Some opponents cheered her departure as they criticized the board for imposing austerity measures as Puerto Ricans struggle to recover from a spate of natural disasters and the pandemic. Critics also note that the bankruptcy process has cost Puerto Rico some $1 billion in consultants, lawyers and other expenses, and that Jaresko made $625,000 a year.

Gov. Pedro Pierluisi acknowledged the clashes his administration had with the board, including a fight he won in which proposed public pension cuts were not implemented. However, he said Jaresko’s extensive financial experience helped reduce Puerto Rico debt payments from $3.9 billion yearly to $1.5 billion as part of the restructuring.

“Although we have had great differences, particularly with regards to pensions, and I have been critical of multiple (board) actions for adding bureaucracy, micromanaging government operations and not reflecting the will of our people, I recognize that Natalie Jaresko has always worked in good faith and in favor of what she believes is for the benefit of Puerto Rico in the long run,” he said.

Jaresko, who was born in Chicago to Ukrainian immigrants, was appointed in March 2017 after being chosen out of a group more than 300 candidates following a four-month search for a new executive board director. She previously worked in various economic positions at the U.S. State Department and also co-founded private equity fund manager Horizon Capital, where she served as CEO.

She told the AP that she was most proud of Puerto Ricans’ strength and resilience despite the economic crisis worsened by deadly hurricanes, earthquakes and the pandemic, and that it gave her strength to complete what she described as “difficult and complex work.”

The U.S. territory declared in 2015 that it was unable to pay its more than $70 billion public debt load that it had accumulated through decades of mismanagement, corruption and excessive borrowing. A year later, U.S. Congress created the board, and in 2017, Puerto Rico’s government filed for the largest municipal bankruptcy in U.S. history.

Jaresko said she plans to remain in Puerto Rico until her youngest daughter graduates from high school and said she hadn’t thought about what she is doing next.

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